Regime Switching and the Wage-Price Spiral

  • Piero Ferri
  • Edward Greenberg


As we reviewed in detail in Chapter 5 and mentioned at other points, the very rapid changes in prices and wages that have been observed, particularly in the seventies and in the eighties, have presented difficulties for models that are strongly constrained so as not to produce unacceptable behavior in the long run. What is needed is a model that can permit rapidly changing wages and prices in the short to medium run, but which does not lead to explosive behavior in the long run. One way of dealing with this problem is to assume a business cycle perspective and to formulate a model that permits changes in regime.


Technical Change Exogenous Variable Real Wage Government Expenditure Real Term 
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Copyright information

© Springer-Verlag Berlin · Heidelberg 1992

Authors and Affiliations

  • Piero Ferri
    • 1
  • Edward Greenberg
    • 2
  1. 1.University of BergamoBergamoItaly
  2. 2.Department of EconomicsWashington UniversitySt. LouisUSA

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